Cuomo administration looking to revamp health home program

The Cuomo administration is looking to revamp the Medicaid health home program, which has cost the state hundreds of millions of dollars while helping fewer people than projected.

The program, a care management model for the neediest Medicaid patients, has had some success in reducing costs during its first five years. Inpatient costs per member per month are down 8 percent, according to the state Department of Health, and utilization is down 6 percent.

Story Continued Below

Closer scrutiny, however, suggests the program is working for some and not others. What successes have been won have come despite misaligned payment incentives, communication problems, technology issues and enrollment struggles.

“It’s a beautiful model and has huge opportunity," said Sharen Duke, executive director at the Alliance for Positive Change, which focuses on patients with HIV and other chronic conditions. "But there have been problems with it."

In an effort to cut waste and improve outcomes, the Cuomo administration is petitioning the federal government to allow the state to make changes, including to the rates providers are paid.

Health homes are not brick-and-mortar buildings. They are a concept based on the idea that if several providers work together to coordinate care for the most expensive Medicaid patients, they can provide better care at a lower cost.

These patients, the so-called super-utilizers, have behavioral and mental health issues, substance abuse problems, multiple chronic conditions, sometimes all of the above. Health homes, which can be a hospital or health and human services agency, assemble a network of providers that together manage care for the patient.

The state’s $65 billion Medicaid program pays the health home to find and engage the patient and then to manage and coordinate the care. During the last fiscal year, the state spent $500 million on the health home program, which enrolled fewer than 200,000 people.

Modest success

When the program began, it was estimated that as many as 975,000 people were eligible, and that was when the state Medicaid program served a million fewer people than it does today. There are 163,000 people currently enrolled in 35 health homes across the state. Of those, one-third have fewer than 2,500 patients enrolled.

Greg Allen, director of program development and management, said the state never expected all the eligible Medicaid beneficiaries to enroll. He thought the program would enroll 231,000 people.

Patients are eligible if they are enrolled in Medicaid and have two or more chronic conditions such as substance use disorder, asthma, diabetes or one single chronic condition of either HIV/AIDS, serious mental illness or serious emotional disturbance or complex trauma. The serious emotional disturbance and complex trauma pertain to children under 21.

The patient population is often transient. They can be poorly educated or unemployed, hungry or homeless. That makes them hard to find, and enrolling the population proved harder than anticipated, Allen said. The original lists of those eligible, which were provided by the state, often did not include an address or contact information.

Once patients were found, health homes had to discern who they could most effectively help and how. This took some time and a bit of trial and error. A community-based organization that specializes in treating opioid addicts was not the right place for someone with schizophrenia, but there was no way to know who should go where when the program began.

“This sort of ‘cast a wide net’ isn’t the right model,” Duke said. “The consequences are that it’s not a good use of resources.”

Skewed incentives

The health home program has its roots in the earliest days of the Cuomo administration, when Medicaid reform was a top priority. The recession of 2008 had not yet abated, and the state’s Medicaid budget was growing at unsustainable levels. Health homes, one of many programs put forward by the governor’s Medicaid Redesign Team, was an effort to lower costs.

The Affordable Care Act allowed states that embraced the health home model to receive a 90 percent match from the federal government for the first two years, another enticement for the Cuomo administration as it looked for ways to rein in costs. It was also one of the first Medicaid Redesign Team initiatives to integrate physical and behavioral health care, and transition benefits that had previously been carved out of managed care.

"We needed to build something statewide," Allen said. Working through the insurance companies wouldn't suffice, he said. They wanted to embed providers who could offer a constant presence to the neediest Medicaid patients.

The state's payment rates, however, provided incentives for the wrong behavior.

Providers are paid for reaching out to patients. It’s called engagement. The theory is that providers need to be compensated for locating hard-to-find people and encouraging them to enroll.

The state currently pays agencies $135 per member per month for outreach, for up to three months. The problem was that providers could make money for not doing much more than sending a letter or making a phone call.

“Outreach for systems has been their bread and butter because you can do minimal work to generate a fee and there is no incentive to [enroll] them,” said one participant in the program who did not wish to be named in order to speak candidly about its flaws.

During the last fiscal year, the health homes were paid for outreach to 387,000 people, twice the number of those actually receiving care management.

That’s one reason why the state Senate, fed up with the spending, cut back on the amount the state would pay for outreach during the budget negotiations this year.

The new rules, which must be approved by the Centers for Medicare and Medicaid Services, would reduce the rate for outreach to $110. Providers could only be paid for two months of outreach, and the second month must include a face-to-face encounter.

State Sen. Kemp Hannon, a Republican from Long Island who chairs the chamber's health committee, said he became convinced that there were a large number of plans receiving money for health homes that were not doing the type of care the state intended.

“So we put forward a proposal in the budget that said in the event you are doing direct health home care, you continue to get the money,” he said. “In the event you are ... not doing health homes, you don’t get the money. I didn’t disagree with the theory of health homes. I disagreed with the implementation.”

Allen acknowledged that the state needed to pay less for process and more for outcomes.

“We’re going to stop paying for multiple months of letters and phone calls,” he said.

In another effort to improve the health home program, the Department of Health recently began requiring hospitals to make referrals to health homes.

"A lot of patients we were looking for were cycling through emergency departments," said Katie Clay, director of the Hudson River HealthCare health home, the largest in the state with nearly 17,000 enrollees. "Having that handoff from the hospital was incredibly helpful."

Her health home has since seen a 10 percent increase in enrollment.

The rate providers are currently paid once patients are enrolled in the health home is based on the severity of the health problems. It differs for upstate and downstate and depends on whether they are in a Health And Recovery Plan, or HARP.

The payment for those with relatively mild problems can be as low as $58 per member per month, meaning it is sometimes more profitable to try and fail to enroll patients than it is to coordinate their care.

The low-end payments are too low to be useful, Duke said.

“Get rid of the $60,” she said. “It’s a stupid number. If they are low-acuity, they shouldn’t be in the program.”

Cuomo proposes rate reform

The Cuomo administration, after hearing similar versions of that complaint from many involved in the program, is planning to change the rates.

The new rates, which also must be approved by the federal government, have not been publicly announced, but the low end is expected to be $250 per member per month. The mid-range payment, which would include most people in a HARP, would increase to the $400 range, and the highest level, for those who, for example, have a serious mental illness or HIV but are not virally suppressed, would increase to $800 per member per month.

That will be a huge help, Clay said, because it will allow for smaller case loads. Some care managers were responsible for as many as 150 patients to make up for the low payment rates, she said. That led to turnover and supervisors spending too much time training new employees.

Some front-line staff also feel the program is too bureaucratic. The Department of Health needs providers to update care plans for patients because that’s part of the agreement with the federal government. But providers get reimbursed for completing progress notes, a similar but separate process. That means to get paid and fulfill the state requirements, the work has to be done twice, and because care plans aren't linked to payments, sometimes they aren't done at all.

Despite the missteps, Allen and Medicaid Director Jason Helgerson vouch for the program and can point to promising signs.

There has a been a 5 percent drop in emergency room utilization and a 1 percent increase in primary care utilization from the third quarter of 2015 to the first quarter of 2016.

There was a 17 percent drop in preventable readmissions between 2014 and 2015, according to the Department of Health, and a 17 percent increase in colorectal cancer screening.

Primary care costs are up 23 percent, and pharmacy costs are up 12 percent, according to the Department of Health.

All this translates to an increase in short-term spending.

Inpatient costs have dropped $39 per member per month, but pharmacy costs have increased $47 per member per month, meaning that, at least for now, the state is spending more money on health home patients than they were before the interventions.

The health home is supposed to reduce overall spending, but Helgerson and Allen said the short-term increase is to be expected. Spending more now on primary care and pharmaceuticals is, the theory goes, going to save money in the future on reduced emergency room use.

It is also true that analysis of health home spending does not take into account important social costs. If patients are on their medication or enrolled in a care management program, they are less likely to end up abusing drugs or be involved with the criminal justice system, and more likely to remain employed. These all have positive budget implications that aren’t typically calculated in the cost-benefit analysis of the program.

Damian Stapleton, 31, is a two-time felon whose mother was murdered when he was 15 years old. He is a drug addict diagnosed with adjustment disorder, mood disorder and anxiety.

He has lived on the streets.

“I robbed and stole my whole life,” Stapleton said.

He had cost the taxpayers a lot of money, and likely was going to continue to do so, either in the emergency room or in prison.

That’s the kind of person health homes were meant to address. Stapleton is enrolled in Mount Sinai health home.

Care coordination is about making sure the simple things are done in order to avoid the complicated. For Stapleton, that meant a phone call to see how he was doing or someone to accompany him to the doctor or the city’s human resources agency.

Something as simple even as a MetroCard can make a world of difference, he said.

“They provided the ability for me to be able to feel comfortable asking for help,” Stapleton said. “I felt like I was dealing with my own people, with people who really love me.”

Now, he says, he pays his bills on time and is writing a book.

"The [health home] model is the right one, and we are currently on a path to success," Clay said. "We’ve seen a few years of tweaks to get things right, but I do really think the dollars are well spent and we will see more of the cost savings as we move forward. I would commend the state for sticking with the program over the past few years."

One of the most persistent complaints with the health home program — as well as the Delivery System Reform Incentive Payment program, the State Health Information Network and others — is a lack of timely and reliable information about the patients.

Timely data has been the holy grail for the Cuomo administration — ever pursued, never attained.

“The technology has been a nightmare, to be honest,” Duke said.

Care managers need data so they can know when one of their patients ends up in an emergency room, and whether their interventions are working. They want to know if a prescription isn’t filled, or isn’t refilled on time.

If a patient is in the hospital, the care managers want to make sure they are involved in the discharge planning, to make sure there are adequate social supports in place when the patient returns home, if there even is a home to return to.

“Better data would make this easier,” Allen said. “We have some of that data and the [Regional Health Information Organizations] are still working with providers, but it is going to take more time.”

Interoperability, or the ability for different electronic medical record systems to talk with one another, is also a problem.

“It hasn’t fully hit its stride because of technology challenges,” Duke said. “If we could address the technology and fix the rates, I think we’d be in a really strong position to help people improve the way they access their care. Then everybody wins.”

Maimonides, which is the lead agency for the Southwest Brooklyn Health Home, built its own IT platform, a move executives said was crucial to their success. The Brooklyn Health Home includes over 50 provider organizations that offer a range of services to more than 10,000 Medicaid recipients. Their data, which has yet to be publicly verified by the CMS, shows they have saved $980 per member per month, or $48 million.

Having its own IT has been the crucial difference, said David Cohen, a senior executive responsible for population health, because it liberates Maimonides from having to rely on claims data from an insurance company or the state. It took about 18 months to get it right, but once they did, they began seeing results.

“Early on, there was no good way to discern which groups of patients would benefit most from care management activities,” Cohen said. “We worked with a number of partner agencies, including discharge units at Rikers Island. ... All of us met to figure out how we could identify patients and improve their care.”

The health home program, he said, needs to be given more time to reach its full potential. Five years, given the scope of the project, really isn’t that much.

“Any program of this magnitude is going to have growing pains,” he said. “It would be surprising to me to get it all right from the start.”